Bloomberg: Visa to roll out sweeping swipe fee changes

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Dive Brief:

Visa wants its swipe fees to vary based on the merchant and the method by which a consumer pays for purchases, according to a document the payment network sent to banks and reviewed by Bloomberg.

The interchange fee — the cut Visa and the card-issuing bank get every time someone pays with plastic — would jump for transactions on e-commerce sites and decline for purchases associated with real estate and education retailers, according to the document.

Visa is planning to roll out the new rates in two phases, in April and October, to give processors more time to implement the changes, the document said.

Dive Insight:

Swipe fees are a bone of contention among merchants, banks and payment networks. Retailers paid nearly $108 billion in 2018 to accept electronic payments, according to a Nilson report cited by Bloomberg. That figure is increasing as more consumers switch to premium cards, which charge higher swipe fees.

The Retail Industry Leaders Association issued a statement that condemned Visa's move. “Let’s be blunt. VISA teasing that rates will go down for 'some' is masking the true impetus for this plan — their aim is to hike rates on the vast majority of merchants. This sleight-of-hand shouldn’t fool lawmakers or regulators. VISA is attempting to hide the impact of these changes with lots of fancy buzz words, but the reality is that they are setting themselves up to drive up costs at local retailers, restaurants and other merchants with higher fees,” said Austen Jensen, RILA's senior vice president for government affairs in a statement. ​

Among the sharpest fee increases are those for purchases made online or over the phone — also known as "card-not-present" transactions​. The swipe fee for using a traditional Visa card on a $100 transaction will climb to $1.99 from $1.90, Bloomberg reported. For premium Visa cards, the fee will rise to $2.60 from $2.50. By contrast, the swipe fee on a $50 premium-card transaction at a large supermarket would fall 33%, from $1.15 to 77 cents.

Visa's lower fees for certain service businesses are an effort by the network to add to the 61 million merchants worldwide that accept its cards. Fellow payment network American Express reported last month that it reached "virtual parity" in U.S. merchant acceptance compared with Visa and chief rival Mastercard.

Visa declined to comment to Bloomberg on the proposed changes. Mastercard also offered no comment as to whether it's proposing changes to its own swipe-fee rules.

The companies are often in lock-step. Retail Dive's sister publication Banking Dive reported last month that the networks refused to further extend a deadline for U.S. gas retailers to upgrade fuel pumps so they accept credit and debit cards with chips — known as EMV payment technology.